PIMCO Total Return ETF Manager Bill Gross

“I’m obsessive,” said Gross, who’s in the office in PIMCO’s Newport Beach, California-based headquarters around 5 am every day. “I’m in it and I still enjoy it.”

Of course, he also oversees the PIMCO Total Return Fund, which was launched in 1987 and is the world’s largest mutual fund with about $285 billion in assets.

BOND is the ETF version of PIMCO Total Return Fund. Because it’s actively managed and not tied to a benchmark, Gross said the ETF is free to overweight certain fixed-income sectors such as Treasury Inflation Protected Securities (TIPS) and municipal debt, as well as international bonds in countries with economies growing faster than the U.S. that are less leveraged.

“We can provide considerable alpha,” or outperformance relative to major bond benchmarks, Gross said. “That’s the enjoyment. I look at it on a daily basis. That’s what we’re here for.”

When BOND first launched, Gross said it was much different than managing the huge PIMCO Total Return Fund due to the flexibility of running a small ETF. “It was like a young deer able to bounce quickly through the forest,” he said.

Additionally, because ETFs are required to disclose their portfolio holdings daily, BOND gives investors a chance to see the moves Gross is making in real time.

In ETFs, PIMCO also has an actively managed currency fund in the works.

Gross said most currencies are yielding less than inflation due to central bank stimulus, although there are some exceptions such as Mexico and Brazil.

“A currency fund these days can be very attractive because central banks are repressing investors around the world,” he noted. “That’s what we hope to exploit – find central banks that run the printing press at the slowest rate. There are central banks playing by the rules with more conservative policies. These currencies can appreciate relative to the dollar.”

Full disclosure: Tom Lydon’s clients own BOND.